Oil prices have surged above $100 a barrel for the first time in years after the collapse of US-Iran ceasefire negotiations and threats by President Donald Trump to blockade the Strait of Hormuz — the narrow waterway between Iran and the Arabian Peninsula through which roughly one-fifth of the world's oil supplies pass. Brent crude, the international benchmark, jumped more than 7% to $102 a barrel on Monday, while Iran announced it would target ports across the Persian Gulf if its own shipping infrastructure came under attack, deepening fears of a prolonged energy crisis.
The breakdown of talks over the weekend, without a new date set for resumption, has rattled financial markets worldwide. European stock indices fell, with the Euro Stoxx 50 — which tracks the eurozone's 50 largest listed companies — down 1.2%, and Switzerland's SMI index losing 0.8%. Investment strategists warn the situation echoes the oil crises of the 1970s, when energy prices dominated every financial decision.
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Germany's ruling coalition has announced an emergency energy package following overnight talks at Villa Borsig, cutting mineral oil taxes on diesel and petrol by roughly 17 cents per litre for two months to cushion consumers from surging fuel costs. Chancellor Friedrich Merz, alongside Vice Chancellor Lars Klingbeil and coalition leaders, said the measures would be counter-financed through tightened antitrust rules targeting price gouging, while companies will be permitted to pay employees a one-off relief bonus of up to €1,000. Merz warned, however, that the state could not offset every market movement, saying plainly that "the war in Iran is the real cause of the problems we also have in our own country." Meanwhile, analysts are drawing comparisons to the stagflationary shocks of the 1970s oil crises, with strategists warning that uncertainty will persist as long as the Strait of Hormuz situation remains unresolved.
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